Health claim denials are the worst nightmare for those who rely on health insurance for coverage in Massachusetts, with the latest numbers giving a shocking insight into just how many people are facing that often costly headache.
Massachusetts health insurers denied roughly one out of every five commercial claims submitted in 2024, with administrative hurdles far outweighing clinical concerns as the primary driver for blocked coverage, according to a state report released Thursday.
That is a number even higher than the already shocking national figures — insurers of Affordable Care Act (ACA) marketplace plans were denied an average of 19% of in-network claims in 2023, while initial denial rates for Medicare Advantage plans hovered around 15.7% to 17%.
The Massachusetts analysis by the Health Policy Commission (HPC) revealed that out of 45.9 million total claims, 20.4% were rejected. Despite common perceptions regarding “medical necessity,” the report found that strictly clinical reasons accounted for “at most” 1% of all denied requests.
Instead, the vast majority of denials stemmed from administrative issues. The most prevalent cause, affecting 11.7% of all claims, involved “other administrative denials” such as failures to comply with insurer procedures regarding timely filing and correct documentation. An additional 4.9% of claims were rejected due to coding errors, incomplete submissions, or duplicate filings.
“These data show there are opportunities to improve how care is accessed and paid for,” said HPC Executive Director David Seltz in a statement, advocating for a streamlined billing system to make healthcare more affordable and equitable for residents.
The impact of these denials varied significantly across different sectors and providers:
Administrative reasons were responsible for 80% of denied professional medical/surgical claims and 67% of denied mental health claims.
United Healthcare recorded the highest denial rate at 28%, followed by HPHC at 27% and Aetna at 25%.
Wellsense had the lowest denial rate among those studied at 11%.
Roughly 90% of denials for United Healthcare and Mass General Brigham Health Plan were categorized as administrative, while nearly 80% of Fallon’s denials were linked to coding or incomplete claims.
Lora Pellegrini, CEO of the Massachusetts Association of Health Plans, cautioned against broad administrative fixes, suggesting they could inadvertently increase costs by weakening fraud and waste controls.
Pellegrini argued that billing issues often occur in high-volume settings where providers routinely resubmit claims as part of standard operations.
Pellegrini further stated that claims processing is not the primary driver of rising premiums, instead pointing to hospital prices, provider consolidation, and prescription drug costs as the key factors.
The report’s findings are expected to inform Governor Maura Healey’s new Health Care Affordability Working Group, which is scheduled to meet for the first time next week to address administrative waste and system inefficiencies.
Additionally, state regulators are currently pursuing a separate effort to streamline prior authorization requirements, with a public hearing scheduled for Feb. 19.